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software licenses.

The company recently audited its systems and found it was sitting on a significant number of unused SAP licenses, or seats.

“We’d own it, and people would not even know that we own it,” Peters said.

Tesoro’s situation is a common problem for any company using complicated, expensive enterprise software from SAP or other similar vendors to run their operations, according to experts. However, there are a number of options companies can use to make sure they’re only paying for the number – and type – of licenses they need, whether it’s better buying strategies or using software asset management (SAM) applications to manage the licenses down the road.

Companies implementing a phased roll-out should negotiate software license fees that are locked in for three years or so, according to Eric Kimberling, president and founder of the Denver-based Panorama Consulting Group, which specializes in ERP implementations.

“There’s no good reason to purchase all that software up front, and pay for it all up front, when you’re not going to implement it all at once,” he said.

Software asset management tools

Software asset management applications help companies control their software, from installations and upgrades to security and version controls. Most, but not all, of those applications also include the ability to track user licenses, according to Charlie Betz, research director of IT portfolio management at Enterprise Management Associates based in Boulder, Colo.

It’s an option that large enterprises with 500 or more SAP users should consider employing, according to the company.

“Software asset management solutions are probably the primary, maybe even the only way, that companies can minimize the cost and software exposure of software license management on any kind of scale," Betz said. And, as software becomes more complicated and more expensive, using software tools to track licenses will continue to grow, Betz said.

For more on SAP software and licensing issues

One company that caters to SAP environments is Flexera Software, a vendor based in Schaumburg, Ill.

Flexera’s FlexNet for the SAP Business Suite software measures how the user is actually using the system, and assigns that person to the optimal, lowest-cost classification.

A better, more accurate user classification can forestall purchasing of additional licenses, according to Alan Swahn, Flexera’s vice president of product management.

If a customer has 10,000 professional licenses, but only really needs 8,000, that company won’t have to purchase licenses for a period of time because of that newly-discovered pool of 2,000 licenses, he added.

At the same time, the software can be used to consolidate duplicate licenses that may be attributed to the same user, but under different names. “Going through that process really cleans up the system,” Swahn said.

Is buying still more licensing software the answer?

Purchasing and implementing software tools for software license management makes financial sense given the cumulative cost of licenses and the subsequent potential for savings, according to Duncan Jones, an analyst with Forrester Research, Inc., based in Cambridge, Mass.

An SAP shop that has 1,000 users with full licenses could save about $1,500 per user if they determined, through better optimization, that those same employees only needed limited professional licenses, Jones said, for a savings of $150,000.

Build user profiles

While license-auditing tools can tell you how often users are accessing the software and how they should be classified, they can’t tell you what users need or should have—information that can be used to make informed buying decisions, according to Jones.

That kind of added control can be acquired through survey-based user profiles that include the person’s job title and responsibilities, what kind of software they need to do their job, and then comparing that against the license usage data coming out of the SAM software, Jones said.

“The reason for user profiles is to get a picture of what you really need, beyond what is actually being used,” he said.

Unused licenses

Companies that find they’re sitting on unused licenses have a number of options.

In Tesoro’s case, the company was able to swap out those licenses for software that better matched its business needs, Peters said.

Companies sitting on extra licenses may be able to pressure their sales representative into offering some kind of compromise, Panorama’s Kimberling said.

“They may allow you to stop paying on maintenance on some of those licenses or charge you for fewer users going forward,” he said.

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